Democrats push FCC, DOJ to scrutinize Verizon AWS deal

A group of House Democrats are urging the FCC and Justice Department to closely scrutinize Verizon Wireless' purchase of a nationwide block of AWS spectrum from four cable operators.

The transaction "may have significant implications for the policy objectives established in the Telecommunications Act of 1996, including the promotion of competition and the expansion of consumer choice in the communications marketplace," the lawmakers said in letters sent yesterday.

The representatives were led by Ed Markey of Massachusetts, a senior member of the Energy and Commerce Committee, and Michigan's John Conyers, ranking member of the Judiciary Committee.

The letters stopped short of asking the agencies to block the transaction, but it asked them to "carefully evaluate the potential impacts of Verizon's post-transaction spectrum holdings and the joint marketing agreements."

The petition reflects concern among some on Capitol Hill that marketing agreements between Verizon and its cable partners in the AWS deal will make the companies less likely to compete with each other on wireline services. Under the marketing deal, Verizon and the four cable operators will cross-sell each other’s products and services and have formed a joint venture.

Verizon has already kicked off cross-selling arrangements with partners Comcast, Time Warner Cable and Cox Communications, leaving Bright House Networks the only operator in the deal to not have embarked on the scheme.

Verizon has maintained that the marketing arrangement is separate from the AWS sale, even though the two transactions were forged at the same time with the same companies.

The plan to cross-sell products received a good deal of scrutiny during a Senate antitrust hearing earlier this year, when Wisconsin Democrat Herb Kohl questioned whether the agreement amounted to a "truce" between Verizon's FiOS service and the AWS cable partners. Verizon has repeatedly stated that its FiOS service will remain competitive, even as it sells other operator's cable service in its own stores.

While much of the concern in the House and Senate has centered on the marketing side deals, issues raised before the FCC have focused on spectrum consolidation. Some of Verizon's competitors have opposed its AWS purchase on the grounds that it will concentrate spectrum in the hands of a small number of providers, while others have called for conditions on the deal.

Verizon is still waiting on FCC approval for the sale of AWS spectrum, slated to be used to supplement its LTE network. It has offered to sell off its 700 MHz A- and B-block licenses if the transaction is approved.